Effects Of Financial Globalization

For many decades, financial globalization has brought benefits but it has also brought crisis and contagion, thus leaving with amplify views that has allowed the offshore banking to be more freely in investing. Since financial globalization has grown through out decades, it has been more complex to be managed by the government that leaves to the supports and opponents to say that the largely unregulated nature of international banking activity and global securities markers leaves the world financial system vulnerable to the collapse of financial institutions on a massive scale, which has been a real threat since at many times the government refuses to give regulatory authority to the global institutions which then limits the oversight of the …show more content…
Securities regulation has also adopted its minimum standard, which consists of the level of capital and reserves, shareholders voting rights, and the disclosure of requirements the increase operation and rapid expansion, investors and borrowers want to channel international capital flows and regulatory authority across the national therefore the securities markets seek to fund the national boundaries. Securities market can be pervasive and uncertain information that’s major fraction is to offset the outcomes of uncertainty, which can happen through the rationale for financial regulation and supervision of asymmetric information that is when customers are less informed than financial institutions, externalities and failure of a financial institution may affect the stability of the financial system that leads to contagion, in which deposit shift from those financial institutions deemed unsound to those to be healthy, and lastly the market power that is the undue power of financial institutions is to the detriment of customers who face higher prices and less choice of products or services (Grittersova, …show more content…
According to Fratianni & Pattison, “there is no international agency with oversight, monitoring authority, or jurisdiction authority over international financial safety and soundness (185)” the lacks of supervisory and regulation risks the stableness of the institutions which then creates real problems and threats similar to the 1970 financial crisis. Supervision in the financial institution bring an effective integration to the systemic stability since they make sure the numerical balance to be consistent, now a days the privileges that banks use to have are gone, because many of them reached to have risky activities by economizing capital because of all the risky activities the government has put measures to reduce it, such as the integration of the Basle Committee and the BIS, to establish financial stability. The major financial legislation’s main focus is to implement the core and principals of an effective management and supervisions, this legislations are the federal reserve Act, McFadden Act, Glass-Steagal Act that separated commercial banking from the securities industry, Gramm-Leach Bliley Financial Service Modernization Act, and Sabernes-Oxley Act which is still effective and that protects shareholders and the overall public from fraudulent practices (Grittersova, 14). Overall their main responsibility is to develop and think